Budget 2026 Corporation Tax

Budget 2026. Business Taxes. Corporation Tax. R&D Tax Credits. Corporate Taxation. Capital Gains Tax.

Today, Tuesday, 7^th October 2025, the Minister for Finance, Paschal Donohoe and the Minister for Public Expenditure, Infrastructure, Public Service Reform and Digitalisation, Jack Chambers presented Budget 2026.  In this series of articles, we have outlined some of the tax changes which we consider most relevant under the following headings (a) Personal Tax, (b) Business Taxes including Capital Gains Tax, (c) VAT, (d) Housing/Property, (e) Agri-taxation, (f) Investments and (g) Global Mobility and Employment.

BUSINESS TAXES

• As you’re aware, the Revised Entrepreneur Relief provides for a 10% rate of Capital Gains Tax on certain gains arising from the disposal of qualifying business assets. Previously, the lifetime limit was €1 million.  Today, the Minister announced that the lifetime limit on capital gains qualifying for CGT Revised Entrepreneur Relief will be increased to €1.5 million, from 1^st January 2026.

• A new exemption from the 1% stamp duty on acquisitions/transfers of shares in Irish registered companies is being introduced. It will apply to the shares of companies with a market capitalisation of below €1 billion that are admitted for trading on certain regulated markets. It will replace the existing stamp duty exemption for companies trading on the Euronext Growth Market.  The exemption is set to expire on 31^st December 2030.

• Previously, Special Assignee Relief Programme (SARP) was an income tax exemption for assignees of 30% of their relevant employment income between €100,000 and €1 million, provided certain criteria were met.  Budget 2026 extended the Special Assignee Relief Programme (SARP) for a further five years, to 31^st December 2030.   From 1^st January 2026, in order to qualify, new claimants of the Relief must have a minimum annual salary of €125,000.   This amendment will not affect existing claimants.  They can continue to avail of SARP, as before, in 2026 and further relevant years.  Finance Bill 2025 is expected to outline the simplification of certain relevant administrative requirements.

• Foreign Earnings Deduction (FED) relief has been increased to €50,000 from 1^st January 2026 and extended for a further five years, to 31^st December 2030.  The Philippines and Turkey have been included in the list of qualifying countries.  Finance Bill 2025 is expected to outline administrative amendments.

• The Key Employee Engagement Programme (KEEP), which was due to expire on 31^st December 2025.  Finance Bill 2025, however, will provide for an extension to this Income Tax exemption until the end of 2028, subject to European Commission approval.  KEEP provides for an exemption from Income Tax, Universal Social Charge and PRSI for any gain arising on the exercise of a share option by a qualifying individual in a qualifying company.

• Budget 2026 announced that the Research & Development (R&D) tax credit will rise to 35%.  The first year payment threshold will increase from €75,000 to €87,500.  An administrative simplification measure was also announced. This will allow 100% of an R&D employee’s emoluments as qualifying costs where at least 95% of that individual’s time is spent on qualifying R&D activities.  This update will provide more certainty and a reduction in administration for companies.

• The Digital Games Tax Credit, which provides for a 32% credit on qualifying expenditure up to €25 million, is being extended by six years to 31^st December 2031. Eligibility is being expanded to allow claims in relation to certain post‑release activities which are subject to qualifying conditions as well as EU approval.

• The Section 481 Film Tax Credit, which currently provides for a 32% credit on qualifying expenditure up to €125 million on certain productions, has been enhanced to provide a new 40% rate for productions with a minimum of €1m of eligible expenditure on relevant visual effects work, up to a maximum of €10 million eligible expenditure per production.  As the Film Tax Credit is an approved State aid, the enhancement measure will be subject to EU approval.

• Finance Act 2024 introduced a Participation Exemption for foreign dividends received, on or after 1^st January 2025, from subsidiaries in EU/EEA and double tax treaty partner jurisdictions.  Today, the Minister announced that several changes to the exemption will be provided for in Finance Bill 2025.  These include (i) broadening the geographic scope beyond dividends paid from subsidiaries in the EU/EEA and double tax treaty partners to include qualifying dividends received from jurisdictions that apply a non-refundable dividend withholding tax.  Other changes include (ii) reducing the period for which companies must have been resident in a jurisdiction within the geographic scope of the relief from five to three years, before paying a dividend, as well as (iii) providing clarification that the acquisition of a shareholding is not deemed to be the acquisition of a business asset for the purposes of the exemption.

• Following an extensive consultation, an action plan for the reform of Ireland’s taxation regime for interest was published today.  The primary request of stakeholders, arising from public consultation, was for a fundamental reform of the framework for the taxation and deductibility of interest.  The Action Plan sets out the timeline for phase one and nine other areas for potential reform under future phases are identified.  The main proposals put forward include: (a) an alignment of the tax treatment between trading and passive interest income, (b) the introduction of a renewed and simplified test for the deductibility of interest for corporation tax purposes as well as (c) the widening of the scope of interest deductibility to include ‘interest equivalents’.

• An extension to the Accelerated Capital Allowances schemes for energy efficient equipment until 31^st December 2030 was announced today.  This provides for an accelerated deduction of 100% in year one for business expenditure incurred on certain energy efficient equipment.

• The Accelerated Capital Allowances Scheme for Gas Vehicles and Refuelling Equipment was also extended to 31^st December 2023.

• The Minister announced that a public consultation on withholding tax will be launched soon to explore opportunities to modernise, digitalise and further expand the scope of withholding taxes.  A joint Department of Finance and Revenue public consultation is expected to be launched soon.

For further information, please click: https://www.revenue.ie/en/corporate/press-office/budget-information/current-year/budget-summary.pdf

At Accounts Advice Centre, we provide accurate and professional tax advice so you have the full and complete information you need to make the right decisions for you and your business.  We ensure your accounts and tax returns comply with the correct accounting standards and legal requirements.  To discuss what we can do for you, please contact us at queries@accountsadvicecentre.ie

Please be aware that the information contained in this article is of a general nature.  It is not intended to address specific circumstances in relation to any individual or entity. All reasonable efforts have been made by Accounts Advice Centre to provide accurate and up-to-date information, however, there can be no guarantee that such information is accurate on the date it is received or that it will continue to remain so. This information should not be acted upon without full and comprehensive, specialist professional tax advice.